Coffee Market Caught Between Record Crop Expectations and Tight Nearby Supplies

By: Alexis Rubinstein, Managing Editor - Coffee Network

Fri, 24 Jul 2026, 13:26

CoffeeNetwork (New York) - The global coffee market finds itself at a critical crossroads as traders weigh increasingly bearish supply forecasts against a physical market that remains considerably tighter than headline production estimates suggest. While futures prices have come under pressure this week following the release of fresh USDA forecasts calling for record global output, tight inventories and lingering supply chain constraints continue to prevent a more substantial decline in prices.

Arabica futures remain elevated by historical standards despite recent volatility. The benchmark September ICE Coffee C contract was trading near 311 cents per pound on July 24, recovering modestly after a sharp selloff on Thursday as market participants digested new production forecasts and assessed the pace of the Brazilian harvest.

At the center of the market's attention is USDA's latest Coffee: World Markets and Trade report, which paints a dramatically different supply picture than the one that supported coffee's rally over the past two years. The agency projects global coffee production will reach a record 189.7 million 60-kilogram bags in the 2026/27 season, an increase of approximately 10.8 million bags from the previous year. Much of that growth is expected to come from Brazil, where production is forecast to rebound to a record 71.9 million bags following favorable growing conditions in key arabica-producing regions.

The Brazilian crop outlook is particularly significant because the country accounts for nearly 40% of global coffee production and an even greater share of world arabica supplies. USDA forecasts Brazilian arabica output will recover to 47.5 million bags, ending a five-year period characterized by weather-related disruptions and inconsistent yields. Timely rainfall during flowering and generally favorable crop development have fueled expectations that Brazil will harvest one of the largest arabica crops in its history.

Those projections have led many traders to anticipate a substantial increase in exports over the coming year. USDA expects Brazilian coffee exports to climb sharply, supported by the larger crop and an anticipated rebuilding of supply chains that have struggled to keep pace with demand during recent seasons. World ending stocks are also projected to increase, helping ease some of the concerns about scarcity that dominated market sentiment throughout 2024 and 2025.

Yet despite these increasingly bearish long-term fundamentals, the nearby physical market tells a different story.

Inventory levels remain unusually tight, particularly in the arabica market. According to recent International Coffee Organization data, certified arabica stocks in the United States have fallen to approximately 410,000 bags, among the lowest levels seen since early 2024. Low certified inventories continue to make traders nervous about nearby availability, even as expectations for future production improve.

The situation reflects a challenge that has characterized much of the coffee market over the past year: the coffee may be coming, but it has not fully arrived. While Brazil's harvest is progressing, the flow of physical beans into export channels and destination markets remains gradual. Producers and exporters have been cautious sellers in many regions, limiting the immediate availability of supplies despite expectations for a significantly larger crop.

Harvest progress in Brazil remains one of the most closely watched indicators for traders. Rabobank reported that excessive rainfall, lower temperatures, and elevated humidity during June slowed harvesting activities across several producing regions and created quality concerns in some areas where coffee was being dried outdoors. While weather conditions have improved and harvest activity has accelerated more recently, those earlier delays have contributed to ongoing uncertainty about how quickly fresh supplies will reach export markets.

Physical trade data also suggest the transition from a tight market to a more adequately supplied one may take longer than some analysts initially expected. Rabobank noted that although Brazil exported more than 3 million bags of coffee in May, arabica shipments remained below year-earlier levels. Robusta exports have increased significantly, but they have not been enough to fully offset concerns surrounding the timing of fresh arabica availability.

Another factor continuing to influence trader behavior is the Brazilian real. Currency fluctuations remain an important component of coffee price formation because they directly affect grower selling decisions. When the real strengthens against the U.S. dollar, Brazilian producers generally receive fewer local currency proceeds for exports, reducing their incentive to market coffee aggressively. This dynamic has periodically slowed farmer selling throughout 2026 and has provided support to futures prices even during periods when supply forecasts have improved.

The result is a market caught between two competing narratives. On one hand, the global balance sheet appears increasingly comfortable. Record production forecasts, rising exports, and improved stock levels suggest that the severe supply deficits that fueled coffee's historic rally may be easing. On the other hand, inventories remain tight, harvest delays have slowed commercialization, and nearby availability is still constrained enough to keep futures prices elevated relative to historical norms.

For now, traders are likely to remain focused on evidence that larger crops are translating into larger exports. The pace of Brazil's harvest, producer selling activity, certified stock movements, and export flows during the coming weeks will be critical indicators of whether the market can successfully transition from forecasted abundance to actual physical availability. Until that occurs, coffee prices may continue to find support despite growing evidence that global supplies are set to improve significantly in the year ahead.

Alexis Rubinstein

Sources: USDA, Intercontinental Exchange, International Coffee Organization

Coffee

This material should be construed as market commentary and represents the opinions and viewpoints of the author, and does not reflect tailored advice associated with any specific account.

The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.

References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.

StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.

StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.

This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.

StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism. SAP is an “Approved International Trading Company” authorized to act as a “Spot Commodity Broker” under the Commodity Trading Act.

StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).

SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.

StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.

StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.

StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Satellite view of Earth at night showing illuminated cities across Asia and the Middle East

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Explore subscriptions

Perspective: Morning Commentary for August 25

August 25 – Stock futures are pointing to a higher open, with the Dow Jones looking to add to yesterday's gains while the S&P 500 and Nasdaq looking at a turnaround Tuesday. The VIX is roughly unchanged to start the day, hovering in the mid 15.8’s at the time of writing. The dollar is quietly higher again, still attempting to find its footing near the 99.0 level after last week’s sharp selloff. Treasury yields are moving lower to start the day, with 2-year yields pushing below 4.21%, while 10-year yields push below 4.66%, and 30-year yields below 5.19%. This cooldown in yields, especially at the longer end of the curve, is certainly welcomed news for the market amid bigger picture concerns regarding the sustainability of U.S. fiscal policy, but we’ll have to see if it can last. Crude oil is sharply lower to start the day after yesterday’s announcement from U.S. Treasury Secretary Scott Bessent came in less aggressive than feared and increased expectations that the U.S. will seek to escalate economically rather than militarily, potentially translating to less risk of longer-term damage to supply in the region. Pakistan’s Interior Minister Mohsin Naqvi also noted that “significant progress” had been made in negotiations between the two sides, supporting ideas that these measures could act as a restart for more notable peace talks, though harsh rhetoric from Iranian officials do contrast with this. Nearby WTI is down 3.4% this morning, trading near $82.10, while nearby Brent is down 3.0%, trading near $87.80. Meanwhile, the ags are lower almost across the board despite a largely more bullish than expected USDA Crop Progress report after yesterday’s close.

Mike CastleTue, 25 Aug 2026, 13:13

Grains & Oilseeds
Energy
Dairy
Renewable Fuels
Cocoa
Coffee
Cotton
Sugar
Meats & Livestock
Forest Products

Daily Coffee Report 8/24/26

Daily coffee report

StoneX Coffee TeamMon, 24 Aug 2026, 20:15

Coffee

Brazil's Coffee Flowering Splits as Robusta Leads and Arabica Waits

Market commentary Coffee - Thought Leadership TeamBrazil's coffee flowering season has split in two, with robusta in Espirito Santo largely finished and arabica in Minas Gerais and Sao Paulo still to come. The rainfall that follows the arabica bloom will decide how much of Brazil's next crop actually sets.

Editorial TeamMon, 24 Aug 2026, 15:39

Coffee

StoneX: We open markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Reach

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.

Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.

Expertise

From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.